OTTAWA—Bank of Canada Governor Stephen Poloz offered a bit of encouraging economic news for the Harper government as the Conservatives prepare to deliver the 2014 budget a few weeks from now.

While keeping its trend-setting interest rate steady at 1 per cent, the central bank said Canadian economic growth would improve to 2.5 per cent in 2014 and 2015 from the weak 1.8 per cent recorded in 2013.

But it will be two years before the economy is performing on all cylinders, the bank said in its quarterly forecast Wednesday.

“In Canada, growth improved in the second half of 2013,” the bank said in a statement accompanying the rate-setting announcement.

However, there have been “few signs” that the hoped-for upsurge in exports and business investment is taking place, leaving the economy still dependent on consumers as the main engine of growth, the bank said.

Canadians need not worry about higher borrowing costs any time soon, Poloz indicated. And even lower rates can’t be ruled out.

Former governor Mark Carney warned for years that the central bank would eventually have to use its rate-setting power to drive up commercial bank borrowing rates to head off a burst of consumer price inflation. But Poloz is saying there is so much slack in the economy that he is as likely to opt for lower rates as higher ones.

Since indications of lower interest rates tend to discourage investment in Canada, Poloz’s more “dovish” stance on his future moves added momentum to the downward slide of the Canadian dollar on exchange markets. It lost nearly a cent, closing Wednesday at 90.19 (U.S.) cents — down from 91.14 (U.S.) cents the day before.

In an optimistic note, Poloz said the United States appears ready to shed its persistent economic weakness and lead a rise in global economic expansion over the next two years.

“Stronger U.S. demand, as well as the recent depreciation of the Canadian dollar, should help to boost exports and, in turn, business confidence and investment” in Canada, the bank said.

With the loonie down about 10 per cent in value in just over a year, Canadian exporters should benefit as their products become more price-competitive in the key U.S. market.

Global growth is expected to rise from 2.9 per cent in 2013 to 3.4 per cent in 2014 and 3.7 per cent in 2015, the forecast said.

The central bank has kept its key overnight rate at 1 per cent—well below normal—for more than three years in an attempt to boost the economy. But growth has been so sluggish that inflation is below the central bank’s 2-per cent target.

“Inflation in Canada has moved further below the 2 per cent target, owing largely to significant excess supply in the economy and heightened competition in the retail sector. The path for inflation is now expected to be lower than previously anticipated,” the central bank said.

Inflation will return to the 2-per cent target in about two years, as the effects of retail competition dissipate and excess capacity is absorbed, the bank said.

Finance Minister Jim Flaherty, who has been dealing with an uncertain global economic situation ever since the 2008-09 recession, is expected to deliver his 2014 budget in mid-February. He has admitted that unemployment remains too high and the NDP has called for him to use the budget to spend more and stimulate economic growth. But so far Flaherty has said the budget will focus on fiscal restraint so the federal government can wipe out its $17.9-billion budget deficit.

The next scheduled date for announcing the bank’s overnight rate target is March 5.

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